Namibia: Opinion – Why Namibia’s Economic Growth Remains Stunted

Namibia, by all comparative standards, has got all the ingredients of a flourishing economy. It has huge deposits of mineral resources, a highly educated youth market and one of the best road networks in the world.

It has effectively developed the communication infrastructure and the political atmosphere is stable. However, it has alarmingly high levels of the divide between the rich and the poor. The housing sector is underdeveloped and most of its citizens (including those who can afford to build a house) do not own property.

Economic growth remains stunted and the ruling elite seems to be clueless about the causes of this mismatch. This mismatch between a rich country and poor population is by design.

A skewed and artificially crippled economy needs targeted, well designed and orchestrated interventions to undo the crippling factors which include massive investments in the production and the manufacturing sector and putting mechanisms in place to prevent capital flight out of the country.

Fifth province paradigm

It has always been the desire of the apartheid regime of South Africa to make Namibia its fifth province. Although the regime made a multitude of investments in infrastructure, housing, health and education, they always ensured that Namibia remain dependent on South Africa.

Namibia received generous funding in their second-tier governments to invest in their people by providing the basic necessities of housing, health and education. None of these funds were targeted towards development in the agricultural sector or manufacturing. As a fifth province and part of a South African regime, the supply of all manufactured goods was conveniently coming from Pretoria. This would include even bottled water! Something that could easily be done in the backyard of any house. This dependency became fossilised. Upon Namibia’s independence in 1990, the new regime continued to “improve” on what the colonial regime did best: infrastructure, health, housing and education. The much-needed investments in the production sector that would duly boost the employment of the citizens were ignored. The tenderpreneurs that gained lucrative tenders from the government and the rights holders from the fishing quotas created a pool of new middle class millionaires who were more interested in investing in building mansions and buying flashy cars than reinvesting in the economy and thus creating employment. Their investments are in offshore banks.

Capital flight

Upon independence in 1990, Namibia was desperate in attracting foreign direct investment (FDI) due to limited capital flow and lack of skills in the country. The country opened export processing zones (EPZ) with generous offers and tax relief for investors. The expectation was that they would boost the manufacturing base of the economy. However, these investors, who were mostly of Chinese origin, came in to do retail businesses. The mining sector is 90% foreign owned. Only a limited amount of investments in this sector remains in the country. Most of the big retailers like Pick-n-Pay, Shoprite, Metro and the banks like Standard Bank and First National Bank were foreign owned. Recently, the country observed an upsurge of micro lenders who are foreign owned with limited Namibian partnerships. The government of Namibia has entered into tender agreements with Chinese companies who receive multibillion-dollar tenders annually. These companies repatriate their income.

There is virtually no evidence that these foreign-owned entities reinvest in the economy of the country. The sudden departure of large sums of money out of the country means a loss to the tax revenue and reduces the purchasing power in the country.

Remedies needed

The basic tenet of economic growth is the employment of the people. No economy will flourish if unemployment is high. It is a domino effect: for any business to flourish, there must be purchasing power! Namibia needs to strengthen its manufacturing and production base.

The Namibian Institute of Mining and Technology (NIMT), for example, has trained approximately 500 fitter and turners over the past three years who have the skills to manufacture car parts (for imported Japanese cars) if given the investment capital; making or retracting cooking oil from plants is the easiest process if there are equipment; factory to can food is not rocket science; making mayonnaise, tomato sauce or cheese is an ordinary cooking process in the kitchen; making flavoured chips only needs potatoes; canning fish only needs a building and infrastructure; assembling cars, TVs, fridges only needs licensing and patent (franchising) rights etc.

When is the day coming that we will talk about Namibia’s own smart TV? The prevention of capital flow needs strict financial control policies. In the final analysis, the success of an economy depends on the political will of the ruling elite, their level of expertise and focus!

* Martin Matsuib is a teacher by profession and is currently the National Coordinator of Namibia Education Coalition for Civil Society Organisations (NECCSO).

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